Salvation Botanicals Ltd (Salvation) is pleased to announce that it has signed a Definitive Arrangement Agreement with Rojo Resources Ltd (Rojo; a public company listed on the TSX Venture Exchange) to complete a Reverse Take Over (RTO) arrangement whereby Salvation will gain a listing on the TSX Venture Exchange. In conjunction with the RTO, Rojo and Salvation will be undertaking a pre-public financing of $2 million.
Salvation has been working to establish itself as a market leader in medical psychedelics for research and clinical trials purposes while firmly executing on its path of developing its uniquely positioned existing cannabis business.
Salvation received its Controlled Drugs and Substances Dealer’s License in July this year, enabling it to test, buy and sell psychedelic substances such as MDMA and psilocybin for use in research and clinical trials. In the last two years, the US FDA has granted breakthrough therapy designation for MDMA-assisted psychotherapy for PTSD and psilocybin-assisted therapy for treatment-resistant depression. MDMA could be available for use in psychotherapy as early as 2021. Medical psychedelics is anticipated to be instrumental in addressing the opioid crisis and the growing level of mental health issues.
Since receiving its license, the company has taken steps and is exploring ways to expand its scope to include production and research support. A partnership with Vancouver-based Numinus will enable Salvation to reach patients through Numinus’ clinics that will eventually provide guided psychedelic therapy to address mental health issues such as addiction, depression and trauma.
The license authorizes possession, testing, sale, transportation and delivery of:
- 3, 4, 5-Trimethoxyphenethylamine (Mescaline);
- N,N-Dimethyltryptamine (DMT);
- N-Methyl-3,4-methylenedioxyamphetamine (MDMA).
“Mental health issues are on the rise in Canada and globally, and we are proud to take a step beyond cannabis as we look to the future of medicine to address these issues,” said Michael Tan, Chief Executive Officer, Salvation Botanicals.
While Salvation’s involvement in medical psychedelics is a key differentiator from other companies in the cannabis sector, its cannabis business will be launched to drive funding for its advancements in this rapidly progressing space by targeting niche segments with high profit driving products and services.
Salvation crossed a critical milestone in its cannabis efforts on September 27, 2019 when it submitted its Evidence Package to Health Canada for a processing license for its fully built and funded 7,500 square foot facility where it will extract and produce cannabis products under its own brands. It expects to receive its processing license in Q4, 2019 subject to Health Canada approval.
Once issued, Salvation will begin the process of applying for the relevant sales licenses to enable sales to distributors and retailers throughout Canada and expects to receive the license by Q1 of 2020, subject to Health Canada approval. In the meantime, Salvation will immediately begin to generate revenue by processing crude extract for sale to other licensed processors and for use in the manufacturing of final products under its own brand through white-label producers with existing sales licenses enabling Salvation to enter the market even before a sales license is granted to its site.
Salvation will also be launching its own brand, “Hope by Salvation”. The brand will consist of a line of CBD products, including capsules, oils, edibles and topicals manufactured out of its facility and through toll processing partners. All products will be powered by Salvation’s hemp-derived CBD oil, extracted using Salvation’s proprietary, isopropanol-based equipment. Salvation plans to eventually produce 2 billion milligrams of CBD per year, converting all into finished, packaged product to achieve maximum margins.
Having identified an opportunity to increase extraction production output, Salvation is developing on-field proprietary technology and processes to take low quality outdoor grown hemp biomass and triple its potency. Salvation will test the technology within its own operations allowing it to be a low cost, high margin producer of CBD products. This work is estimated to be implemented in Q1, 2020. Once proven, Salvation intends to license the technology and offer it to other licensed processors.
Through demonstrated industry knowledge, Salvation also intends to cater to discerning cannabis customers through a line of high-quality rosin extracts under its own brand that is currently in development. Rosin refers to a solvent-free method of extraction capable of retaining valuable terpenes for aroma and flavour. In recognizing British Columbia’s reputation in the global cannabis industry, Salvation will look to source high quality input material from BC cultivators.
Salvation’s licensed, independent 7,000 square foot lab is well positioned for rapid revenue growth with instruments and validated methods in place to accurately conduct the full suite of Health Canada’s testing requirements for cannabis products in 3 to 5 days versus competing standards of 2 to 3 weeks – a key advantage for producers seeking to get to market faster. Salvation’s facility has capacity to conduct almost 100,000 individual tests per year, with the ability to double capacity with capital investment.
Given the legalization of the next wave of cannabis products, Salvation is readying its lab to begin the testing of edibles, extracts and topicals to accommodate anticipated high demand. Salvation’s highly experienced team, consisting of PhDs experienced in analytical methods and phytochemistry, and a head of laboratory operations, who holds a Masters in Science in instrumental analytical testing, collectively has more than 65 years of experience.
“The next few months represent a really exciting time for Salvation Botanicals as we continue to establish ourselves as a market leader in both the cannabis industry and the emerging psychedelics space,” Tan said. “Our commitment to the highest levels of social responsibility and ability to recognize opportunities and develop frameworks to make them a reality is what sets us apart, and is what will drive our success as we continue to work towards implementing our key projects.”
Rojo also announced a two staged financing to consist of:
(i) 2,600,000 units at $0.25 per unit for $650,000 (each unit to consist of one post-consolidated common share and a one warrant exercisable at $0.50 for 24 months, subject to acceleration); and
(ii) 5,500,000 subscription receipts at $0.25 per receipt for $1,375,000 (each receipt convertible to one post-consolidated common share and a one-half of one warrant exercisable at $0.50 for 24 months, subject to acceleration).
For details on this financing, the definitive arrangement agreement, and all related matters involving Rojo and the proposed TSX Venture Exchange listing, see Rojo’s news release of October 21, 2019 available on SEDAR at https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00007888. Questions can also be directed to firstname.lastname@example.org.
Cautionary Statements Regarding Forward-Looking Information
Certain statements within this press release constitute “forward-looking statements”, within the meaning of applicable securities laws, including without limitation, statements regarding future estimates, business plans and/or objectives, sales programs, forecasts and projections, assumptions, expectations, and/or beliefs of future performance, are “forward-looking statements.”
Such “forward-looking statements” involve known and unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements. These risks and uncertainties relate to, among other things, to the Company’s historical experience with medical marijuana operations, regulatory changes, timeliness of government approvals for the granting of permits and licenses, changes in medical marijuana prices, actual operating performance of facilities, risks associated with completion of the acquisition, including the availability of sufficient financing to complete the acquisition and fund the business of the combined company, other risks relating to the roll-out and intended expansion of a clinical wellness business, business integration risks, competitive risks, and other risks relevant to the medical cannabis and clinical wellness industries in general and to the Company in particular. There is no assurance that (i) the proposed RTO with Rojo will be completed on the terms outlined above, or at all; (ii) the proposed $2,000,000 financing will be raised on the terms contemplated, or at all, or (iii) Salvation will be able to attain production levels or output as forecast above.
The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law. There can be no assurance that Salvation Botanicals’ license applications will be approved by Health Canada.